Podmog - ds1 is a fantastic reader, he's just gone into yr2. Like your dd1 he was an early reader, and a good reader, and like your dd1 he was given books in yr1 which were well below his 'standard'. We were delighted with his teacher in many respects, and he explained he thought it important for ds1 to 'go through the scheme', and also that he was already two stages ahead of any other child in the class, so.. Anyway we decided to stick with his advice, and actually there were many benefits:
DS1 didn't refuse to read the books, and actually enjoyed many of them. They only took 5 mins to read, so that left us loads of time to read the stuff he really wanted at home. But as well you can use these books to talk about different ways/styles of writing. You can break down the plot, to study different ways of telling a story. It's great, and you couldn't do it with a longer book. (Look at this for more ideas about story-writing and plot development. By the way your dd1 may well enjoy these books now or very shortly.) You can also ask all the 'what do you think will happen next' stuff, and ask her what the best bits were, how she would develop the characters etc. If she is very bored and very negative about the books, I'm sure her teacher will pick it up. Some of these reading scheme books are pretty good quality nowadays.
Anyway he's now in yr2, he's one of the youngest in his class but a phenomenal reader, and his new teacher has now put him straight on to 'free readers', but these are longer - c.70 pp, so take much longer to read. Some are great, but some are pretty grim. He/we would much rather have the shorter reading-scheme books, and then give him more time to read the 'proper' children's literature he wants at home.
I'm sure if you are positive to her about the books she has, then she will be positive about them too.
Not sure how coherent this is, but hope it helps anyway.